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Mining subsidies top $4.5bn: Australia Institute

Fuel tax concessions to the mining sector amount to more than $2.5 billion per year.

David Gray: Reuters

Left-leaning think tank, the Australia Institute, says Federal Government subsidies to the mining industry have increased by half a billion dollars over the past year.

Figures released earlier this month by the Productivity Commission show the mining industry received $492 million in direct subsidies last year.

But senior economist with the Australia Institute, Matt Grudnoff, says if you include tax concessions provided to mining companies, the amount of subsidy is almost ten times that figure.

"The mining industry has the lowest rate of corporate tax because it has so many tax concessions," he said.

"The average is about 21 per cent, the mining industry only pays 14 per cent.

"While we have a big debate about the car industry and how much subsidies we give those, they're only getting about half a billion dollars a year whereas the mining industry gets four and a half billion dollars a year."

Exploration and prospecting deductions increased by $220 million on last year while deductions for capital works expenditure rose by $127.5 million.

Concessions for tax paid on crude oil condensate have decreased by $550 million following the Federal Government's decision to shift this tax to the petroleum resources rent tax.

But Mr Grudnoff says the decrease has been compensated by a rise in fuel tax credits to the industry of $458 million.

The mining industry has dismissed the figures saying they misrepresent the scale of government support.

Minerals Council spokesman Ben Mitchell says fuel tax concessions shouldn't be considered a form of subsidy.

"It's not a subsidy because it's a business input, in the same way that a carpenter's drills might be a business input," he said.

"The fuel tax was imposed to build public roads. Mining builds its own roads and that's why we get a credit on that."

The figure produced by the Australia Institute doesn't include any state-based subsidies or concessions.

Mr Grudnoff believes the $4.5 billion estimate is conservative.

"The Federal Government is helping to pay for a lot of rail and port infrastructure that the mining industry uses," he said.

"So it's certainly an underestimate of how much they actually receive."